TOKYO, March 4 (Reuters) – Stocks slumped and bond yields slid on Tuesday in Asia as investors prepared for an escalation in a global trade war with new U.S. tariffs on Canada, Mexico, and China set to take effect within hours. The U.S. dollar remained weak, with sterling near a 1 1/2-month high and the euro firm as European leaders drafted a Ukraine peace plan for Washington. Crude oil hovered near 12-week lows, and bitcoin fell around $86,000 after erasing a surge to nearly $95,000 earlier in the week. Europe appeared headed for a lower open, with STOXX 50 futures dropping 1%. Investors grew more risk-averse after U.S. President Donald Trump announced 25% tariffs on Canada and Mexico effective from 0501 GMT on Tuesday, along with increased levies on China to 20%. The Canadian dollar and Mexican peso fell, though China’s yuan rebounded from recent lows in offshore trading. Concerns mounted over the impact on the U.S. economy amid recent weak data. Monday’s figures showed factory gate prices rose to a nearly three-year high, and materials deliveries slowed, suggesting tariffs could soon hinder production. Despite short-term concerns, many investors and analysts remained optimistic in the medium term. U.S. Treasury yields continued to decline in Asian trading, with the 10-year yield hitting its lowest since October at 4.115%. The U.S. dollar index reached its lowest since February 26 at 106.45. The euro was steady at $1.0490 after a 1.1% gain on Monday, while sterling held at $1.2705 after a 1% rise. The dollar dropped 0.5% to 148.71 yen but rose 0.3% to 20.75 Mexican pesos, extending Monday’s 0.8% increase. The yuan strengthened about 0.2% to 7.2927 per dollar after weakening to 7.3078 on Monday. Bitcoin traded at $85,468 as optimism about a U.S. cryptocurrency reserve waned after Trump’s social media post naming five tokens, including bitcoin, for the plan. Gold fell 0.2% to $2,888 per ounce. Crude oil continued its decline from Monday, with both Brent and WTI settling at their lowest levels since early December amid reports OPEC+ would proceed with a planned April output increase. Brent futures dropped 0.7% to $71.15 a barrel, while U.S. West Texas Intermediate crude futures fell 0.4% to $68.09 a barrel. — news from Reuters
